Bank of England Governor Mark Carney hinted on Thursday that financial markets were wrong to assume that an interest rate hike in May should be expected, underlining that there were also “other meetings” this year.
Speaking to BBC news on the sidelines of the IMF spring meetings in Washington, the leader of the English central bank said that the interest rates were still likely to gradually increase this year, but softer data had given the Monetary Policy Committee a reason to hesitate. He said the committee was now aware that there are other meetings in 2018 when it can consider rates.
The comment dashed widespread expectations for monetary policy tightening in May. Interest-rate futures markets have estimated the probability of a rate increase next month of up to 90 percent.
Carney said he does not want to be too focused on the exact timing, but more on the general path of the policy. He added that Britain should prepare for a “few interest rate rises over the next few years.”
The Sterling pound declined almost a cent against U.S. dollar to its lowest level since April 9 on the back of the comments, in which Carney underlined “mixed” economic data.
While unemployment declined to a new 45-year low and employment growth was strong, wage growth was weaker than anticipated. After the disappointing data, a steeper-than-expected decline in inflation.
In the end, Carney said that the result of the Britain’s divorce negotiations with the European Union would be the biggest factor in economic decisions in the coming years. He said that the central bank’s decision will be adjusted to the impact of those decisions in order to keep the economy on a stable path.
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